What’s the gold price outlook as gold markets hit nine-year high?
Rising at $1859 an ounce today, analysts expect the gold price to break its $1921 all-time high within the next few weeks.
Where next for the gold price?
Having reached a nine-year record high last night, the gold price is rallying again this week. Analysts predict it will push higher in the near future to a new all-time high.
Up 0.95% at $1858.81, the precious metal is at its highest level since 2012, gaining traction as world economies are increasingly getting into debt and printing substantial amounts of money to fight the consequences of the pandemic.
Joshua Mahony, senior market analyst at IG, said in a recent analysis: ‘Even if we do see the price of gold decline in the near term, it is highly likely that such a move would simply be another retracement and precursor to another bullish turn.’
‘As such, any short-term downside is simply perceived as a retracement, with a bullish outlook in play unless the price breaks below $1796 support’, he explained.
Gold price soars as world leaders are adopting new economy recovery plans
Yesterday morning, after four sleepless nights of negotiations, the European Union leaders agreed on a €750 billion recovery plan to support their economies amidst the upcoming recession. This emergency fund will give out €390 billion of grants and €360 billion of loans.
In the US, Steven Mnuchin, Secretary of the Treasury, confirmed to Bloomberg this week that the next stimulus package being worked on by the Trump administration could total around a trillion dollars.
As the pandemic is accelerating, especially in the US, the Federal Reserve (Fed) could ease even more its monetary policy. Bloomberg reports that several Feds officials, like Charles Evans, John Williams, and Raphael Bostic, have warned that the US outlook is getting worse. The three indicated that easing the policy was the right path to take.
According to Goldman Sachs, the Bank of England could also signal in August that its rates could turn negative.
Furthermore, gold will likely benefit from signs of weakness in the US currency. ‘In two-thirds of cases, gold and US dollar prices are inversely correlated’, explained Arnaud du Plessis, thematic equity portfolio manager at CPR Asset Management in a recent note.
In this context, it’s only a ‘matter of time’ before gold hits a record high, considers Citi analysts, who added that demand for a store of wealth should also lift silver, which touched a six-year high today.
Therefore, gold price is expected to climb to an all-time high in the next six-to-nine months, with a 30% probability to reach $2000 an ounce in the next three-to-five months, they predict in a note published on Monday.
Discover on IG TV why you should keep at least 10% of your portfolio in gold as a hedge
How to trade commodities with IG
- Create an IG trading account or log in to your existing account
- Enter ‘Spot Gold’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Trade on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.